Tuesday, July 29, 2014 -- This Could Be A Very, Very Exciting Day For The Market -- This Is Not An Investment Site

Active rigs:

	7/29/2014	07/29/2013	07/29/2013	07/29/2013	07/29/2012
Active Rigs	194	179	179	179	207

RBN Energy: Tsunami of oil hitting Houston, much is posted below, but much more with graphics at the linked site:

The current capacity of incoming crude pipelines into the Houston refining region is about 1.4 MMb/d. By the end of 2015 that will have more than doubled to 2.9 MMb/d.

Add to these flows crude railed into new and developing unloading terminals as well as barges of Eagle Ford crude from Corpus Christi in south Texas and the prospects for congestion build up.

Foreign waterborne imports into Houston are falling as pipelines supply more refineries but in the process a lot of floating storage flexibility is being lost. Today we describe the Houston crude distribution system that could be overwhelmed by the new flows.

In Part 1 of this series covering the changing crude storage situation at the Gulf Coast – home to 50 % of US refining capacity. In Part 2 we began a deeper dive analysis of Houston area refineries to understand how important floating storage provided by waterborne crude imports can be. Our analysis showed that the typical imported waterborne barrel delivered to Houston refineries spent 17-20 days in transit. That floating storage period provides refiners with flexibility to withstand supply shocks such as refinery outages. We also calculated “storage days” for crude delivered to Gulf Coast region refineries at 32 in April 2014 - the same as the national average since 2011 but about 68 percent higher than other waterborne fed regions like PADD I (East Coast – 19 days) and 28 percent higher than PADD IV (West Coast – 25 days).

In Part 3 we compared that 32 storage days for the Gulf Coast as a whole with Houston area refineries where working storage is roughly 21 days if refineries run at 95 percent of capacity and 22.5 days if refineries run at the 5 year average 89 percent of capacity.

Today:

That’s a total of about 1.4 MMb/d capacity today and double that or 2.9 MMb/c capacity by the end of 2015 – on top of ongoing waterborne and rail unloading deliveries.

As we determined in the previous episode in this series, Houston already suffers from a shortage of available storage capacity to handle this flood of crude.

Once the pipelines reach close to capacity, the incoming flows will exceed refining capacity – even after planned additions, so some of that incoming crude will make its way to refineries outside the Houston area – probably in Louisiana.

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Easy Come, Easy Go

When something seems to good to be true, it probably is. The Dickinson Press is now reporting that the Obama administration has stopped processing all new applications for condensate exports. And that probably explains why the price of oil is down again today. I assume President Obama got back home after his trip to California, saw the paperwork on his desk regarding condensate exports, and phoned up the Commerce Department, and said, "hey, wait until after the elections, and by the way, why didn't you call me first on the earlier application approvals?" I assume the Keystone XL paperwork was under the condensate export paperwork. It's always something.

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The War On Coal

Three data points:

• the EPA will shut down the second-largest coal-fired power plant in the US, run by the Navajo Nation
• US is shipping record amounts of coal to Germany
• Arch Coal reports earnings today that beat estimates

The AP is reporting:

One of Germany's newest coal-fired power plants rises here from the banks of a 100-year-old canal that once shipped coal mined from the Ruhr Valley to the world.

Now the coal comes the other way.

The 750-megawatt Trianel Kohlekraftwerk Luenen GmbH & Co. power plant relies completely on coal imports, about half from the U.S. Soon, all of Germany's coal-fired power plants will be dependent on imports, with the country expected to halt coal mining in 2018 when government subsidies end.

Coal mining's demise in Germany comes as the country is experiencing a resurgence in coal-fired power, one which the U.S. increasingly has helped supply. U.S. exports of power plant-grade coal to Germany have more than doubled since 2008. In 2013, Germany ranked fifth, behind the United Kingdom, Netherlands, South Korea and Italy in imports of U.S. steam coal, the type burned in power plants.

And then the article quickly turns into an op-ed piece (LOL):

On the American side of the pollution ledger, this fossil fuel trade helps the United States look as if it is making more progress on global warming than it actually is. That's because it shifts some pollution — and the burden for cleaning it — onto another other country's balance sheet.

Last year, Germany's carbon dioxide emissions grew by 1.2 percent, in large part because the country burned more coal. German environmental officials say the recent boom in coal-fired power is making it harder for the country to meet its climate-protection goals, even as it has increased renewable energy and participates in a carbon market that has lowered emissions throughout Europe.

Activists put some of the blame on the U.S. and President Barack Obama.

Ms Merkel shuts down Germany's nuclear energy program, turns back to coal, and now the activists blame Mr Obama for sending coal to Germany. How precious. I can't make this stuff up. No wonder Mr Obama has decided to step away from geo-politics and simply go golfing. I would do the same thing. 

These German activists blaming the US for their (German) carbon footprint almost makes them eligible for the Geico Rock Award, but they have a better chance for the annual Darwin Awards.

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Politics

It looks like SecState Kerry is getting beat up pretty badly. Everyone is piling on, opining on why Kerry is failing. I would hate to miss the opportunity. The two big reasons he is failing:

• his speech on global warming in Tel Aviv was misinterpreted; the locals thought it was a "code" warning them what the surface temperature in Israel is going to be when Iran gets their nuclear missile(s)
• he thought he was POTUS, able to walk on water (oh, a reader just told me it was someone else, not POTUS, who actually walked on water)

But the #1 reason he's failing:

• the Israeli blockade of the Gaza beach did not allow him to get a Putin-like athletic photo-op of him (Kerry) sail surfing

By the way, it appears Kerry has moved his sail company to Ireland to escape US corporate taxes. (Sort of like home-porting his yacht in Rhode Island instead of his home state of Massachusetts to avoid state taxes.) I can't make this stuff up.